Economic winds of change - Warnings on jobs and trade risks

Economic winds of change - Warnings on jobs and trade risks

Nobody in their right mind would criticise the Taoiseach when they hear him say the government he leads wants to see a continuing fall in unemployment, though they might not unreasonably dismiss it as a useless statement of the overwhelmingly obvious.

There are, however, grounds for a degree of scepticism when he announces that he wants “to be in a position to create 50,000 new jobs” this year.

On what calculations and forecast of economic trade winds is this target based? How many of these new jobs will spring up in the private sector?

Will they be in traditional businesses, Big Tech or services that haven’t yet been imagined?

How many of those new jobs will simply replace jobs lost? He notes: “Jobs will be gained, jobs will be lost, there’s always a certain amount of churn in the labour market” – as, indeed, there is always a certain amount of churn in which politicians lose their jobs.

Or is that 50,000 an attractively upbeat round-number for a soundbite?

The Government does have some good news on jobs to report. Unemployment in skilled trades has fallen from 13% in 2013 to 2.6% in 2018, says the Further Education and Training Authority. The number of people employed in 2018 rose by 63,000, lifting the total to 2.26m.

Yet there reasons to be cautious about the extent to which prudent governments in free market economies such as ours can control labour markets. Ireland is not immune from the market forces that are radically reshaping large swathes of the UK’s economy. More than 140,000 high street retail jobs were lost there in 2019.

A Centre for Retail Research study found that 38,100 people were thrown out of work as a consequence of chainstore closures. More than 78,000 jobs vanished in cost-cutting programmes — very often replacing people with machines — by large retailers, and as a result of small, independent shops simply closing down, driven out of business largely by levels of taxation and other costs that do not as yet afflict online retailers.

The study calculated that 16,073 UK shops closed in 2019 (approximately 61 every working day), up from the 14,583 closures in 2018.

None of this has prevented Britain reaching and maintaining record levels of employment, albeit that much of it is in jobs offering low pay and scant security. The upshot is that more people are in work, but poorer.

Other warnings for Ireland of possible trouble ahead have come recently from the Fiscal Advisory Council, which has judged that the Government is too reliant on corporation tax from a small pool of international companies, and from the National Competitive Council (NCC), which sees this dependence on Big Tech and pharma corporations as a potentially unsustainable economic model.

One third of Irish exports, according to the NCC, come from only five corporations, thus masking stagnant or falling productivity in the much larger pool of smaller companies.

Ireland, says its chairman, “is relying on one big engine as we fly into stormier skies”.

Fine Gael and its rivals will doubtless want to convince voters in the few months ahead that they’ve thought through robustly the promises they’ll be making about jobs, state spending and the economy.

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